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It’s important that you have a good understanding of what you’re investing in – otherwise you may as well be gambling. Whether it’s stocks or property, you should take the time to truly assess what it is you’re putting your money into. Below are some important tips for knowing what you’re investing in.
Buy stocks of companies you know and love
If you’ve just started trading stocks, try to resist buying stocks of companies you don’t know just because they look like they’re on the rise. You should have a basic understanding of what the company does first so that you can understand what is driving its potential growth. Take a look at large companies that everyone knows and uses like BP, Coca-Cola and Google (Alphabet Inc). These companies may not produce stratospheric gains quickly, but they’ve been around a long time and you know they’re not going to collapse overnight.
Turn your hobbies and interests into investments
It makes sense to invest in something that you’re already passionate about as you’ll likely enjoy researching it and you will make more carefully judged decisions as to what you invest in. An example could include investing in wine if you’re a passionate wine enthusiast. Such investments may also be able to bring you joy beyond a financial return. For example, popular collectibles like vinyl, watches, antique furniture, comic books and art are all things you can display or use even if they don’t make money.
Always conduct an inspection before buying real estate
Whether you’re buying a home or investing in property to rent, it’s important to always carry out an inspection beforehand so that you know exactly what condition the property is in. Many bad real estate investments are the result of buying property that is expensive to maintain – often because the buyer didn’t truly know the condition of the property. Always hire a professional to carry out a full survey. There are other tangible investments where inspections can be beneficial such as hiring a professional to authenticate a rare antique.
Get expert help when investing outside your comfort zone
If you are still considering investing in things that you don’t truly understand, take the time to get expert support first. In many instances, it can be worth talking to experts who can advise you on where to put your money. For example, if you’ve been thinking of investing in shares of a private company, a private investment research company will be able to help you find the best investment. Make sure that any experts you seek advice from have a good reputation.
Read the small print so you understand the extra costs
There are many forms of investment that come with hidden costs. This includes costs like broker fees and tax. It’s important that you understand these fees so that you can budget for them and decide whether investing is truly a good idea or not. Different brokers and exchanges will carry different fees – always look these fees up so that you know what you’re getting yourself into and take into account any contract updates.
